US-PRC solar dispute proposal offered

TRADE TUSSLE:：As the two countries grapple for market share, they have imposed high tariffs on imports. The SEIA’s plan, if accepted, would abolish those duties

Bloomberg

Tue, Sep 24, 2013 - Page 15

A solar-energy group is offering a plan to resolve a trade dispute between the US and China, saying import duties currently in place are crippling the industry in both nations.

The Washington-based Solar Energy Industries Association (SEIA) planned to announce yesterday a proposal to eliminate tariffs on solar gear and establish a fund to help US manufacturers with contributions from China.

“The problem we have right now is that the trading rules are not working well,” John Smirnow, vice president for trade and competitiveness for the group, said in a telephone interview.

“Solar has a very complex global supply chain” and relying on the existing system to settle trade disputes is not working, he said.

Tensions between the US and China, the world’s two largest economies, over clean-energy production have threatened to erupt into a trade war within the last year, with both sides imposing duties on imports. The price of polysilicon, the main ingredient in solar cells, has dropped 57 percent since 2010, as both nations grapple for market share.

The US Department of Commerce a year ago set penalty rates for Chinese producers, including Suntech Power Holdings Co (尚德電力) and Trina Solar Ltd (天合光能), after determining the companies had benefited from government subsidies and had “dumped” their products onto the US market at below the cost of production. The US unit of Bonn-based SolarWorld AG brought the complaint.

In July, China began imposing duties as high as 57 percent on US polysilicon imports.

The US solar-energy industry, which includes manufacturers as well as installers of solar panels, has been caught in the crosshairs.

While import duties on Chinese-made solar cells have benefited some US manufacturers, they have made the finished panels more expensive, harming panel installers and consumers who face higher prices for the finished product, according to Smirnow.

At the same time, Chinese manufacturers face higher prices as they seek to avoid US duties, he said.

Since the tariffs set by the Commerce Department last year apply only to Chinese-made solar cells, solar panel manufacturers in China are buying cells at a premium in Taiwan and putting together the finished panels in China before shipping them to the US, Smirnow said.

The US industry plan would abolish the US duties on solar cells from China, as well as China’s tariffs on US-made polysilicon.

Instead, China’s solar-energy companies would establish a fund in the US that US solar-cell manufacturers could draw from to help them “scale-up,” Smirnow said.

While the size of the fund would be negotiated based on market estimates, it would probably be in the hundreds of millions of dollars over the next three years, he said.

“Currently Chinese companies are paying a premium to get their products into the US market,” according to Smirnow.

Payments to the fund — combined with the abolition of US import duties — would provide Chinese manufacturers with a cheaper option than having to purchase solar cells in Taiwan or another nation, he said.

The plan is similar to a settlement in which the US agreed to pay into a Brazilian fund to help that nation’s cotton industry rather than face stiff import duties, Smirnow said.